Observations focused on the problems of an underdeveloped country, Venezuela, with some serendipity about the world (orchids, techs, science, investments, politics) at large. A famous Venezuelan, Juan Pablo Perez Alfonzo, referred to oil as the devil's excrement. For countries, easy wealth appears indeed to be the sure path to failure. Venezuela might be a clear example of that.

Archive for May, 2006

I still find it amazing that many Chavez supporters still are in denial
about the depth and scale of corruption in the revolution. After the
confession by the corruption Czar Eliecer Otaiza, that of Chavez himself saying
that the Caracas corruption stops everything from moving forward where has he
been in the last seven years) and now the charges by the once trusted
Magistrate Velasquez Alvaray, I still get e-mails telling me that there is no
proof, that this is all hearsay and the revolution is pure and honest.

Well, let me, once again, challenge these people who only want to write
anonymously to explain to me something that was supposed to have disappeared by
now with the creation of the Bank of the Treasury and is likely to be a billion
dollar size source of corruption. I will be brief, since I gave a long
explanation earlier:

When Chávez got to power official deposits, that is funds by Government
institutions in the commercial banking system, were 1% of all deposits. Today
they are around US$ 10 billion or 27.7% of the monetary liquidity in the
country. This makes no sense. Why borrow money to give to Government
institutions if all they do is keep it in the bank? Something is rotten
somewhere.

Now, this has been going on for some years now, as the funds move according
to commissions that are making a bunch of people very rich: the Government
officials that get paid by the banks to divert their money their way and the “new”
bankers who pay the commissions and have seen their banks grow in obscene
fashion. So have their profits.

Last year, I actually applauded the decision to create the Bank of the
Treasury to manage these excesses. I said: “I was quite pleased to hear that
the Government was going to start a “Banco del Tesoro”. “ Well, once again I
was wrong in my praise of the revolution.

You see, the idea was that funds would flow to the Bank of the Treasury
and the corruption racket would disappear. Well, it has been almost a year. The
Bank of the Treasury is fully functional and official deposits have gone down
by less than 1% (It was 28.5% last August).

Why? Money, money, money.

There is absolutely no justification for this. As Ochoa says in
his interview today, if the Treasury were to be managed efficiently, the
Government would not even have to issue new debt. Imagine that! But of course,
commissions would disappear.

The worst part is that for this to continue to happen, it has to be
known all the way to the top. Maybe Chávez does not know it, but the layer
below does. Without their collaboration it could simply not happen.

That is how bad corruption in the Vth. Republic
is, the so called pretty revolution that has become a “robolution”. In my
earlier post, my calculation was that commissions were way over a billion so
far, around US$ 500 million last year alone.

This does not include, Argentinean bond corruption, inside information
about debt buybacks, “special sales” to friends and the like. This is ONE
specific case that has no other explanation or justification. So, open your
eyes my friends, the country is being pilfered and raped by these crooks in the
name of the revolution and the poor and one day we will all have to pay for it.
Will you still be in denial?

Well,
after last night’s post on the new Corruption Czar, it turns out that even a
bigger cesspool was opened up today by the Supreme Court Justice that was suspended
yesterday from his position by the Consejo Moral Republicano (CMR).

The
Justice, Luis Velásquez Alvaray, was none other than the writer, when he was an
MVR Deputy, of the new Supreme Court Bill, which allowed Chavez to increase
that Court by 12 members by simple majority. But curiously, that Bill also
included the possibility of having the CMR suspend anyone from the Highest Court in
the land if there were charges against him or her. Even more ironically, it was
opposition Deputies who opposed this feature of the Bill, since it was then
directed specifically at then Magistrate Franklin Arrieche, in revenge for him having
written the majority opinion that said there was no coup in April 2002.

Velasquez
Alvaray’s press conference was wide ranging, quite juicy and even included
some taped conversations which he picked from what he called an “extensive
collection of tapes.” The now suspended Magistrate was charged with a corruption accusation related to the construction
of the new headquarters for the judicial system, named “Ciudad Lebrun”. There
are charges of Velasquez Alvaray profiting from the purchase of the land, as
well as kickbacks and bribes in the process of building the new headquarters of
that “Judicial City”. Velasquez Alvaray took offense to
the charges and the suspension, but reportedly he was told that he would not be
suspended by the CMR. But he was.

Velasquez
Alvaray’s statements show what happens when checks and balances disappear in a
political system and a single political faction controls everything. In
revealing what he did, he showed not only how corrupt the revolution and the
Government are, but also how he had kept that knowledge to himself, protecting
his comrades in arms, until he found himself accused of corruption and not
protected by his former revolutionary buddies.

His most
damaging charges were directed against the Vice-President, Jose Vicente Rangel,
the President of the National Assembly, Nicolas Maduro and his accuser Minister
of Interior and Justice Jesse Chacon. He claimed they wanted to remove him
because he has tried to stop them repeatedly. He called
them “The axis of Chavismo without Chavez…which would not be socialism, but
capitalism of the XXIst. Century…who want to take over the state so they can
commit their abuses….”

He claimed
that President Rangel and Maduro knew who the members are of the infamous “Band
of the Midgets”, which is supposed to control the judicial system. However, he
failed to mention if he knew who they were. Why?

He repeatedly
made connections between Rangel and the case of murdered Prosecutor Danilo
Anderson. He asked aloud: “Why does the Vice-President keep such an eye on the Anderson case?” He
claimed that they started going after him when Rangel called him and asked him
to remove Judge Alejandra Rivas, who was in charge of the Anderson case. But, he claimed, he found the
Judge to be honest and decided not to listen to Rangel. But, he questioned, “What
is Rangel’s interest in all of this?”

Velasquez
played a recording in which he is talking to Judge Rivas and she describes to
him irregularities in the Anderson
case at the request of members of the National Assembly and another one in
which she says that Rangel knew who the “Midgets” were. Pretty amazing stuff, when you consider that
he is accusing the Vice-President and the President of the Assembly of trying
to intervene in a case that they should have nothing to do with under the
separation of powers. A case that has been extremely murky, in which the
Government has tried over and over to blame the opposition, but all evidence
points more and more to some sort of inter-Government fight as the explanation
for the assassination In any decent country heads would be rolling tonight, but
not in this autocracy which later has an absentee autocrat.

Velasquez
Alvaray then began asking why a whole bunch of recent millionaires are not investigated
by the Moral Council. Among others he mentioned: –Julio
Macaren. This character is none other than the owner of
Petrotulsa and North American Opinion Research, Chavez’ favorite pollster. The
same one that openly and publicly threatened bloggers calling us The Anglo
Venezuelan Connection (TAC), who said his cooperative was one of these “social”
programs, but apparently it is making him a millionare. Well, Velásquez Alvaray
accused him of enriching himself suddenly at the expense of the revolution. He called him one of the largest intermediaries
of the Government. What an impartial pollster, no? He is the one that says
Chavez ahs 70% popularity. Velasquez Alvaray also accused him of bribing a
Judge to accuse him.

–Pedro
Torres Ciliberto: One of the owners of Bankinvest, Alvaray called him the main financier
of the Government, suddenly a very rich man.

–Arne
Chacon. The brother of the Minister of Interior and Justice has gone in three
years, as reported here in the Devil in 2005, from lowly employee of the tax office to part owner of a
Bank and he
even put in an offer of US$ 10 million to buy some milk pants from Indulac,
the milk producer. Of course, nobody investigates him, the Comptroller says
nothing and the Prosecutor says nothing, simply because they all know too much
about each other and how they are all becoming millionaires in the name of the “robolution”.

–Maikel
Moreno: Only last night I mentioned the
honorable judge Moreno, the only convicted murderer in the world who has
been named a Judge after being released from jail. Alvaray played a recording
of Moreno
asking him to release someone, telling him the Vice-President of the Republic
was asking for it! This is the great “new” revolutionary judicial system Chavez
imposed.

Of course,
Velasquez Alvaray claims he is so honest and just. But you have to wonder why did
he hide all these facts while being a member of the Supreme Court? How does
that fit with his claimed honesty? Shouldn’t he have reported it all? Denounced
it with the same vehemence that he does now?

But no.
The problem is that they are all covering each others asses, as the country is
being pilfered, robbed and abused in the name of the revolution. Meanwhile Hugo
Chavez is going around the world giving away the country’s money as if it were
his, while locally the bounty is being distributed by revolutionaries and the
enemies of the revolution alike. And nobody is watching. Absolutely nobody.
What a disgrace this revolution has turned out to be!

Meanwhile,
Rangel blames
the Justice’s emotional state for his statements, saying that “Each thief
judges others based on his own behavior”. Obviously he denies everything. What
else can he do?

But the
cynical Prosecutor rather
than saying he will investigate, says that the audio tapes have no legal
validity. He says that if Velasquez presents evidence he will investigate. Of
course, everything else against his enemies he investigates, even if it is just
only hearsay. But Arne Chacon’s wealth is public knowledge. The audio tapes
were real. But that is not enough to investigate his own comrades in arms. Of
course, he does not want to touch the Anderson
case, where he has built a sand castle with his so called evidence to involve
opposition figures and reporters.

They all
protect each other. Where is the corruption Czar today? Robbing someone or
setting up his gym in his new office?

And the
pretty robolution marches on, while the absentee landlord/autocrat travels
around giving away the country’s wealth and caring little about what is going
on. How long can this go on?

The fascist roots of the revolution sprung up today, when the National Guard raided
the University of the Andes, violating, once again, the Venezuelan
Constitution, that gives university campuses autonomy. This has been
ver rare in Venezuela’s recent history, with the raid by Rafael Caldera
in the late 60’s being the one that generated the most controversy and
political conflict. Long gone are the days of the first year of Chavez’
Presidency when Generals visited campuses to show that this Government
was “different”.

The Guards went in to the campus to quelch
the protests in that University which arose from a decision by the
Supreem Court to suspend the elections for Student Union in that
University. Reportedly, the Guards removed the media from the
University and then proceeded to gas the students that were protesting.
There many students and police injured.

The Supreme Court
suspended the election in response to an injuction from a pro-Chavez
group that was asking for the CNE to organize the elections, rather than
the students themselves as has always been the case. This is also
considered to be a violation of the autonomy guaranteed to universities
by the Constitution. University autonomy is a right in most Latin
American countries.

“All of the citizens have the right to associate themselves for political
goals, using democrataic methods of organization, functioning and direction. The
organsims of direction and their candidates to popular elections will
be selected using internal elections with the participation of its
members.”

Given this how
can Chavez criticize Sumate saying: “Why is Sumate calling for
primaries?…… the empire is pressuring for primaries…they want to become a
parallel Electoral Board, calling for primaries”

Well Hugo, its your law, your Constitution, that is what iternal elections means, just because you don’t follow it,
does not mean others should not or is an order of the Evil Empire. So, you
better get your story straight, read your little blue book again, maybe you may find it. It’s called democracy, but I know you don’t quite understand that concept yet.

–This morning a local newspaper denounced that Judge Gumer Augusto Quintana had been in jail for armed robbery. This afternoon he was rmoved from his position. What’s the big deal? We already have Judge Maikel Moreno, a convicted murdered as one of the most trusted judges of the revolutiion.

—Peruvian TV reports that Chavez protected Fujimori’s trusted adviser Vladimir Montesinos. Really? Didn’t Deputy Carreno say that Montesinos was dead when the Venzuelan press said he was here? But Montesinos later showed up here alive and well and was sent off to Peru in minutes? Why did Carreno say that? Why did the Head of the intelligence police hold a press conference to deny Montesionos was in the country?

—Carter Center representative Jennifer McCoy shows up and expresses her backing for the new CNE. I guess she used the same criteria as that fateful day of the recall vote: Absolute Ignorance, Total Loyalty. That is one stupid statement by Ms. McCoy. Has she read their statements so far? Does she really back them?

The
revolution is truly amazing. They have no morals and no ethics. They name as
“Head of Government Contract , a new position supposedly to control corruption
none other than Eliecer Otaiza, the former Head of Disip, Ince, Land Institute
and whatever other positions he has had. This is the same guy who as he was
appointed to each f his positions, went out and spent Government money to
build himself a gym adjacent to his office. The same guy who signed memos
requesting food and beverages out of Ince funds to give to Chavistas marchers. Thesame one
that said Venezuelans should be armed!. The same guy who killed a lady
that was riding with him in a police motorcycle at a time that he held no
Government position, the evidence was changed and eventually he was charged,
but magically the charges were dropped and he was named to a nw Government
position.

But he is
now the corruption Czar. What a big joke! But let’s hear what he had to say
during his testimony in the National Assembly. You don’t even have to remember
that Chavez has been in power seven plus years, I will make sure to remind you:

“In the last seven years many people have
become very rich and made very lucrative deals, wearing the red beret of the
Bolivarians”

No!!! For
the shame of it. Who would have thought it? After all the denials, now we learn
that many people have become rich wearing red berets, but he did not mention
one of them. He must know who they are, no? But he keeps blabbing about:

“Some are extreme right, I call them “Machete
International”, some are military and others are crooked comrades who go around
making huge deals in the name of the revolution”

In one
swipe, he confesses there is a corrupt and
rightwing MVR branch, corrupt military and crooked comrades. This guy is worth
his weight in platinum, titanium or gold. That is exactly what you have been
reading in this blog for a long time. But now I have the good housekeeping seal
of approval from corruption and corrupt himself Czar Otaiza. Now, as you read the following remember that
Chavez has been in power all of seven plus years:

“I have been commissioned by the President toinitiate the hunt for the Chavista “nouveau
rich” and declare the war against corruption.”

About
time! Seven years and now you are initiating
the war. This from the colonel whose main gripe was supposedly the level of corruption
in Venezuela
during the IVth. Republic, but he has allowed it to reach unprecedented levels
during his mandate. But Otaiza seems to know more:

“There is a group of people who have become millionaires
in this revolutionary process, they have their little companies and now they are
also interested in controlling the anti-monopoly ill too”

Wait! Hold
it there! Read this carefully and remember it has been seven revolutionary years!
There is a group, and they are millionaires,
but if they are interested in the anti-monopoly bill, they can’t have “little
companies”, that I not precisely the realm of “anti-monopoly”. But there is
also an intriguing feature: Given that there are no opposition figures in the
Nationals Assembly, this suggests that these millionaires are ready to
influence half of the revolutionary Assembly? All 81 of them? Oh! The pretty
revolution never ceases to amaze me! Whatever happened to things like ideals,
principles and ethics? Did the revolution ever have them?

But let’s
look at the evolution of things under the revolution:

—95% of
all contracts since Chavez took over have been done by direct assignment rather
than open bidding, down from 13% in 1998. Yes, 13%! The IVth. Was not as
corrupt as they claim, no?

—According
to Otaiza, in 2005, 100% of the municipalities, half the Ministries and two thirds
of the Governorships violated the law. Nice record!

—Same
source: Of 337 municipalities only six provided information within three months
as established by law.

—Mercal:
Two state managers have been fired for corruption, none charged. This includes one fired for stealing ten Tons of
meat. I guess the revolutionaries are also hungry.

—Caaez (Barinas
sugar plant): As you have read it here, the Assembly said there was corruption
for US$ 2 million; but little has been built despite US$ 200 million being
spent. Well, last week, the Vice-President of the Comptrolling Committee of the
National Assembly said that corruption in Caaez is likely to be above Bs. 140
billion (US$ 65 million). Finally the numbers begin to make some sense.

—The
fund for agricultural development gave Bs. 44 billion (US$ 20.4 million) to
four coops that don’t exist in the Zaraza region.

—In the
same region, that same fund has given credits to plant 51 thousand hectares. The
problem? Zaraza only has 31 thousand
hectares of arable land. The magic of the revolution, land multiplies!

But we are
not supposed to worry. Today the “moral” Council removed a Supreme Court
Justice (Chavista at that!) because of corruption. This Council includes the
Comptroller Clodosvaldo Russian, in charge of stopping corruption since 2000. I
wonder what he has to say about Otaiza’s statements, because so far he has
found very few corrupt people in the last five years. In fact, he keeps denying
they exist!

But as Chavez
said today: “It is the corrupt in Caracas
that stop everything”

Where does
he live? Where has he lived in the last seven years? You guessed it: Caracas, right in the midst of the largest corruption run in the country’s history

I will close my posting on the work of Delfino, Salas and Medina by showing how curious the results of the failed audit of the night of the referendum were. This is probably the least impacting of the four, but it certainly gives you food for thought.

The CNE had promised the country to audit 1% of the voting machines or 196 of them. Unfortunately only 26 of them were audited on the fateful night of the RR. Curiously, the Si (Yes) vote obtained 63.47% in these 26 machines, compared to the 40.9% that it obtained nationwide.

What Delfino and Salas did was to order the centers that were supposed to be audited according to the fraction of signatures to voters at each center f=Signatures/Voters as shown in Fig. 1, from low f to high f. The sample of centers generated by the CNE had an average value of f=0.37, that is 37% of the registered voters in these 196 centers had signed to have the recall vote against Hugo Chavez. In contrast, the average f for those centers that were eventually audited that evening was a much higher f=0.54 or 54% of the voters in those centers had signed to have a recall vote, as can be easily seen in the plot below of all of the centers and where those that were effectively audited that night fell on the curve.

Fig. 1 Plot of the value of f at each of the centers that were supposed to be audited on the night of the recall vote, ordered from low f to high f. The crosses indicate the 26 centers that were effectively audited.

(The cross point with the low f around 0.17 that was audited curiously corresponds to the military hospital in Caracas)

Now, one can ask a very simple question: What was the probability that you would choose the 26 centers with an average value of f above 0.54 or f>0.54. What Medina did was to calculate it theoretically and then to also simulate it numerically and the probability comes out to an extremely small 3x 10-8 as shown below in the probability curve for getting each value above a certain f:

Fig. 2 Probability plot of the value of f being above a certain value when you chose 26 centers at random from the 196 centers that were chosen on the night of the recall referendum to be audited.

1x 10-8 is extremely unlikely…as so many things related to the recall vote.

What is intriguing is that centers with high f concentrate only a small fraction of all the voters as can be seen in the following figure, where you can see that the largest number of voters is concentrated around f=0.3, precisely where audits were not performed.

Fig. 3 Distribution of the number of votes as a function of the value of f for all automatic and manual centers, showing where the largets concentarion of votes was..

Yesterday President Hugo Chavez said during his Sunday reality show “Alo Presidente”, that two top world filmamkers including Oliver Stone had asked for permission to make a movie about the 2002 “coup” and said that they had authorized him to announce it on his Sunday program.

Well, today Reuters is carrying this news item in which Stone says that “these rumors are untrue and unfounded”

Oh shucks!, I guess Chavez will have to concentarte on saving the world and maybe later, the Universe!

(Note added: It turns out Chavez had already picked the cast for the movie, here i is:

This article appeared in Chile’s La Tercera yesterday, it speaks for itself, another warning, this time for the country that most suffered form the effects of a Government which violated freely te rights of its citizens. It is written by Ascanio Cavallo a Dean of Journalsim at a Chilean University.Chávez’
Horizon by Ascanio Cavallo in La Tercera

Among the dance of
ideas of what to do with the copper surplus-the rich kid’s syndrome-the most
original one is that one proposed by Senator Camilo Escalona: Let’s help Bolivia. The
socialist chief based his proposal affirming that this would contribute to
improve the security of the Nation and would create a long term horizon in the
relationship Santiago-La Paz. In Chilean diplomacy there are many conflicting
opinions about the origin of the difficulties with Bolivia, but nobody can deny that
the idea sounds subtle and reasonable.

The problem is that it
has a small defect: Hugo Chávez has his hand deep and probably for the long
term in Bolivia.
The Venezuelan President has turned Evo Morales into the main flagship of his
influence in South America and he went as far as fighting Brazil for that
hegemony. It seems difficult that he would accept competition in Bolivia.
If he perceives it, the most probable outcome is that he will unsheath that
quick trigger style that has created so much irritation in the region.

Chile’s political class (not to mention the economic
one) has tended to see the Chávez phenomenon with some levity.It has not perceived with clarity that his
project is one of continental hegemony, not an eccentrity limited to the folkloric
features of politics in Latin America. At some
point after the attempt to overthrow him in 2002, Chavez’ military instinct
activated a synaptic reflex that his own security would depend on his main
adversary, the US,
having more problems and fewer friends in the region.

For this, he had to
jump the principle of non-interference, a purity that gets along badly with
real-politik and in which his intellectual references like Fidel Castro have
never believed in. Chávez intervened in Bolivia,
is doing it in Peru and Nicaragua, will do it in Ecuador and if he finds the space will do it in Colombia, Brazil
and Argentina.
And Chile?
Of course he will. The moment he can do it.

Chavez chose Castro as
his partner in this effort. But, by surrounding him with historical praise and
cheap oil, he retired him. Anyone that visits Cuba these days may ask whether, without
any sarcasm, it is the Cuban commander that governs that island or is it the Venezuelan
colonel that does?

Chavez surpasses
Castro in at least two attributes: the first one is money. Thanks to oil, Venezuela has become the first rich adversary
that Washington
has had in the region. Not only rich, but also ready to use the money: buying
Argentina’s sovereign debt, handing out sympathies in the Bolivian campaign and
now in the one in Peru and backing under cover, or at least in stealth fashion,
diverse political groups in the Continent.

The second one is his
capacity for identifying and co-opting the most marginal groups, either via
their political system or via the economic models. Wherever Castro used to
favor adventurer intellectuals like Che, Chavez chooses Bolivians indigenous people
or the “etnocaeceristas” from Peru,
the landless movement or the homeless and so on. Chavismo expresses much better
than Castrism the hoarse unhappiness with globalization or the capitalist
order.

And because of this he
has designed a system of sub regional pacts destined to sabotage the main
symbol of that order, the free trade treaty with the US. Even worse, he demolished in a
few hours the Andean Community of Nations, only because Peru was chosing its own free trade agreement
with Washington.
Can anyone think that the most successful country, both in quantity and quality
in free trade, Chile,
is indifferent to the Chavez project?

The silence in Vienna

The Chilean Foreign
Minister has opted for a line of extreme prudence and neutrality in the face of
what is happening in the Continent. At the meeting that she had with Chavez in Vienna, President Bachelet announced that Chile would not have an opinion over the decisions
of is neighbors in Latin America, which was reiterated
later by foreign Minister Foxley. You can bet that in exchange for this, they received
assurances from the flattering colonel that he will do the same for Chile. Not on
the others, he could not; because he is already acting on them. They seem like
the assurances that Von Ribbentrop gave one day to a guy named Molotov.

This supposes that Chile
will not have an opinion about the eventual deterioration of democracy, freedom
of speech or even human rights in those nations. It is sad that a country that depended
so much on international solidarity and trials, has to renounce ahead of time
to back democratic principles if they were to be threatened in other latitudes.It is sad, but it is
surely realistic. Everything indicates that Chile lacks for now any other
alternative. The role of the great international interlocutor that former
President Ricardo Lagos dreamed of for the country vanishes like a soap bubble,
given the intricate new outlook for foreign policy.

Nevertheless, it would
be even dangerous for local diplomacy to sit and lean on the definitions it had
to make during these days. Whether they want it or not, Chile will have
an influence over its neighbors due to its won needs.

There were two mayoral elections today in Carrizal, near Caracas, and Nirgua, in Yaracuy state. The CNE has declared the two opposition candidates the victors in the two races.

In Carrizal, Jose Luis Rodriguez, an AD candidate defeated the MVR candidate Luis Aponte 6088 to 6022, a very small margin. Abstention was high 56.7%. Rodriguez had opposed the use of fingerprint capture machines, even introducing an injunction in the Supreme Court. The Court never replied. Rodriguez was the current mayor and was supposed to be in danger of losing as people were not too happy with his performance as mayor.

In Nirgua, Luis Vasquez, the candidate of an alliance led my MEP got 10,698 votes versus 8750 of Miguel Sanchez, the candidate of MVR. In this race, the usually pro-MVR Tupamaros sided with the winner. Abstention was 43% in this race.